Mortgage Approvals Dip - Gross Lending Up

Mortgage approvals for house purchases fell slightly from 60,800 in April to 60,000 in May, says the Bank of England.

Approvals for remortgaging, which only include remortgaging with a different lender, also decreased slightly from 29,900 in April to 29,600 in May.

Net borrowing of mortgage debt by individuals fell from £2.2 billion in April to £1.2 billion in May.

The BoE adds that the annual growth rate for net mortgage lending increased to 0.3% in May, following a rise to go 0.2% in April - the first rise in the growth rate since October 2022.

Gross lending climbed for the fourth consecutive month, reaching £22.2 billion in May, up from £21.1 billion in April. Gross repayments also increased by £1.2 billion over the same period, totalling £20.5 billion.

Former RICS residential chairman Jeremy Leaf, a north London estate agent, says: “In our offices, sales agreed numbers are still good as buyers and sellers shrug off concerns about the election, but more importantly perhaps, valuation appraisals and listings are on the up, which has meant prices are softening a little.

“Approvals are always a very good indicator of demand in the recent past and near-term transactions to come.

“Certainly, we are seeing no signs of withdrawals or heavy negotiations so expect more of the same or even slightly better as hopefully mortgage rates start to drop over the next quarter.”

And SPF Private Clients chief executive Mark Harris says: “Mortgage approvals for new purchases dipped slightly on the previous month, perhaps reflecting stubbornly high mortgage rates, which may have raised borrower concerns with regards to affordability and confidence.   

“Remortgaging numbers decreased again as borrowers chose to stick with their existing lender and do a product transfer rather than go through the additional hassle of refinancing to another lender.   

“With inflation hitting its 2% target, an interest rate cut is increasingly likely, which will boost the market and give lenders more confidence to price their mortgage rates lower.”